Seven Financial Reasons to Use Linux in the Enterprise

Even a discussion on religion and politics might well include mention of operating systems when a Linux user is in the room. The enterprise has quietly been adopting Linux, first on hidden-away servers but then in the open and even on the desktop. Ignoring ideological debates that intervene when the subject of Free and Open Source Software (FOSS) enters the picture, let’s cut to the chase and look at financial reasons for adopting Linux. After all, it all boils down to “TCO” (Total Cost of Ownership), doesn’t it?

At even a casual glance it is quickly apparent that there are very few enterprise-level organizations running only Linux. For that matter, there are equally few that are 100 percent Windows or fully Unix or anything else, given constraints in available applications. A quick example for some may be the use of Linux (with Asterisk) on their telephone systems, but for any number of reasons, the larger an enterprise is, the more likely it will be a mixed environment. This set of reasons to use Linux is therefore a case for a balance of systems that is heavily weighted toward Linux. And there is a compelling financial argument for the use of Linux as the default solution in the enterprise.

Think the argument in this article is a load of hooey? Believe that it’s the most accurate examination of the Linux in the enterprise? Be sure to read the other viewpoint in Eight Reasons Not to Use Linux in the Enterprise.

Lower Licensing Costs

The first consideration is the most obvious. Under the GPL (GNU General Public License), Linux is available without licensing cost. Also, commercial packages or distributions are available from companies like Red Hat and the Novell-owned SuSE. Purchased this way, the operating system is typically bundled with additional applications and some level of vendor support. Practically speaking, some cost is typically attached up front. Still, it is generally considered fairly self-evident that such costs will be lower on a per-seat or per-processor basis than for Windows or most commercial Unix systems.

Avoid Vendor Lock-In

Vendor lock-in occurs when a customer becomes dependent on specific vendor for products or services and cannot change vendors without substantial migration costs. Brian Stevens, CTO of Red Hat, says the client is clearly in the driver’s seat. “[The IT Department] needs to be in control, whether it’s problem resolution or vendor selection. Linux or open source puts them back in control – vendors can assist or get out of the way. Linux is very empowering for IT. Vendors perform or IT can take the complete stack and move it.” With a move from a given Linux environment, it may be that migration costs could be triggered by a move to a substantially different system, but within the variety of Linux distributions and the available commercial support options, changes can be made with relative ease, should the need arise.

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Redirect Funds into Salaries

Within the blend of costs summarized as TCO, the use of Linux tends to shift finances spent on licensing costs into other areas – personnel is most typical, whether internal or outsourced. R. Scott Belford, founder of the Hawaii Open Source Education Foundation (HOSEF), observes that savings in licensing costs alone can pay a salary, meaning that the dollars spent remain in the local economy. Rainy Day Software President and CTO Scott Toderash agrees, explaining that spending money on personnel, whether internal or external, is always more beneficial than spending on licensing costs.

Support costs have long been considered a hindrance in migrating to Linux, but this perception has steadily woven its way into the realm of misconception. Belford suggests today the opposite may be true. He put the question to a class assembled for a lecture he was giving at the University of Hawaii, and the anecdotal data gleaned there supported his assertion. Toderash agrees, saying that every technical person will present himself as “knowing” Windows, but to find someone with the requisite level of expertise is no more or less difficult than it is for Linux.

Provide Source Code Access

A critical argument for FOSS is the freedom to access and modify source code to meet specialized needs of the enterprise, and this is no different for Linux. Mark Hinkle, vice president of Business & Community Development for Zenoss, admits that this benefit can be hard to quantify in financial terms but argues that it is definitely present and is a huge factor for Zenoss in its selection of platforms. While a distinct need for code modifications may not exist today, the availability of the source code provides an assurance that even if support for some critical feature or device were dropped in the future, it could be reincorporated by assuming some development cost. The argument for source code access is something of a religious debate to some but, for the enterprise, it is simply an assurance of future flexibility and a guard against obsolescence.

Opens an Array of Available Applications

Yes, you read correctly: Even though a major objection in migration to Linux has to do with the availability of applications. While Microsoft Office and other applications may not run natively on Linux, emulators and terminal services have been used as successful workarounds in some environments. As for running applications natively on Linux, a shift has clearly been taking place. Open Office (Star Office) has matured into a credible replacement for Microsoft Office, and suitable alternatives exist for most major software packages used in the enterprise.

Toderash recently addressed the issue of applications as a barrier to Linux migration, particularly groupware, which he called a misconception. “People don’t like Exchange Server,” he said. “They think there’s no replacement, but that’s not true.” He adds that he just installed eGroupWare, describing it as painless and giving him support for syncing with both Palm and BlackBerry. Zenoss’s Hinkle suggests that Web-based applications make the client platform less relevant than ever before, since it operates within a browser. The LAMP stack is crucial for them (LAMP refers to the bundling of Linux, Apache, MySQL and PHP, Perl or Python) to achieve this result, he said. Ultimately, this may be an example of leveraging a strong share of the server market by Linux and other FOSS to make the client less relevant-and to diminish the need for client licenses.

Facilitates Rapid Corporate Growth

After noting that “Linux is the paragon of open source,” Hinkle states plainly that FOSS allowed his company to build a product that is competitive with large proprietary applications that took years to build. “Open source made it possible for us to grow really, really quickly.”

One of the primary reasons for this advantage is the low barrier to entry. Systems can be built essentially with “no money down” and invested in over time as their usage ramps up with the growth of the enterprise. Initially, a small Linux deployment can be rolled out, and resources can be spent scaling up as warranted rather than absorbing high up-front costs for small deployments. In this way, business risk is mitigated by not having to wait a long time to recoup up-front expenditures.

Pays for Value

Setup costs vary, but building on Linux shifts the cost from licensing to expertise. Toderash refers to this as “leveraging your brain instead of your wallet,” explaining that investigating and selecting software (or developing modifications) for Linux can take more research time up front. “After an hour of research, some people will spend $5,000 to avoid a second hour, but they could spend all week at it and still be ahead. It comes down to trading money for time.”

The real question is perhaps how one allocates the inevitable cost of IT. Steven O’Grady of RedMonk recalls that years ago Windows helped people move from the high licensing costs of Unix to deliver applications with lower price points, just as Linux is helping people move away from Windows licensing now. “Windows has helped reduce the total cost of solutions over time, [and] open source has taken that to the next level. In some cases, the total cost of the solution itself can be what you have to build on top of it.” Businesses will then invest in service and support instead of licensing. O’Grady says, “What open source has done is not make everything free or remove the costs of software, but instead shifted the up-front licensing model to what Sun’s Simon Phipps calls ‘paying at the point of value.”

His reference is to an article by Phipps last year about “Software Market 3.0,” about the deployer being “liberated to pay just for the things that result in value,” and paying when value starts to be realized “instead of at the point of acquisition of the bits.” Essentially, the costs are minimized up front, and triggered only as the enterprise ramps up and invests in whatever support is necessary to actually operate the system.

Drum Roll, Please…

It may be argued that the financial consideration of deploying Linux over any other system will all come down to TCO. True, perhaps…but one thing that we’ve managed to highlight in considering the variables is that the kind of expense rolled up within the TCO matters. For many, even if the TCO were equal, the shift in the type of expense that Linux achieves can commend it over Windows or other proprietary systems as a wise financial decision.

Summarizing the seven financial reasons to use Linux comes down, I believe, to the last reason offered: paying at the point of value. In one way or another, an aspect of each of the foregoing reasons pokes its head up in this single concept, which truly represents the coup de grace in settling the question.

Brent Toderash recently left the IT consulting firm of which he was an owner and manager (disclosure: with Scott Toderash, quoted above) to become a freelance writer, thinker, strategist and consultant. Founding editor of Penguinista.org, which he ran from 1999 to 2003, he lives in Winnipeg, Manitoba, and blogs at toderash.net.